WASHINGTON – Several small business owners have been mistakenly funded twice through the Small business managementrescue loan program after submitting multiple applications to different financial institutions.
What would you like to know
- Several small business owners did not receive money from the first round of PPP
- They were encouraged to reapply with another bank in the 2nd round
- Some banks have required direct deposit; several banks sent money, owners say
- Business owners await advice on what to do with the extra money
Spectrum News has independently verified at least five instances in which borrowers discovered duplicate loans were deposited directly into their bank accounts last Friday after requesting the Paycheque Protection Program via Chase or PayPal.
Rita Zapko, a registered agent with Devlin Financial who works as a small business and tax advisor, discovered the funding problem with several of her small business clients.
“We saw the wires on hold, and we thought it was going to stop at some point, and then the wires settled in,” she told Spectrum News. “We thought we would get some advice on this in the next 48 hours and figure out how to click a button and say, ‘Duplicate funds received in error, please return. “But that didn’t happen.”
The same situation happened with other applicants, who were informed that their loans had been approved and deposited by different lenders almost simultaneously. In the Chase and PayPal apps for the program, small business owners had to sign a promissory note or direct debit before the loan was approved and disbursed. This step of the process was designed to get the money out quickly. However, this prevented small business owners from accepting or rejecting financing before it reached their accounts.
“All the lenders had different processes and had different forms. They follow the same law, but if you and I read the same paragraph, we’ll come up with a different interpretation,” Zapko said.
“Some banks, like Bank of America, sent the promissory note afterwards, so if you’ve already been funded, you have the option of telling them and rejecting the funding. With the way Chase, PayPal and I think that Loan Source did, you didn’t have a chance to stop it.
An email from Chase Bank notifying a business loan applicant that their loan application has been approved by the SBA. (Screenshot)
After the first round of the nearly $ 350 billion government loan program ran out in just days, many small business owners say they were encouraged to apply to multiple lenders to increase their chances of receiving money in the second round.
Chase Bank emailed borrowers after the program ran out of funding, suggesting they might want to apply for the program elsewhere. PayPal has also made it clear in its website guidelines that current applications do not prevent borrowers from applying elsewhere. Several small business owners have contacted members of Congress after they did not receive funding in the first round and were asked to re-apply through a smaller community bank.
“I lost all confidence in Chase’s ability to get through this. I didn’t know where I was in the pecking order in terms of funding, so I decided to go through someone else. backing up, ”said a business owner in Indiana. who wished to remain anonymous but ultimately obtained duplicate loans of $ 150,000 from Chase and PayPal.
The SBA has approved more than 2.2 million loans worth more than $ 175 billion out of the total of $ 310 billion approved by Congress in the latest coronavirus relief plan. Over 1.6 million loans were approved in the first round of financing.
Chase Bank admitted that she was aware of the duplicate funding issue.
“We have funded over 239,000 PPP loans. A handful of clients have reported that they are also funded by another institution. The SBA will respond directly to each client to determine next steps,” said Anne Pace, spokesperson from Chase Bank.
An email from PayPal notifying a business loan applicant that their loan application has been approved by the SBA. (Screenshot)
Spokesmen for the SBA, Treasury and PayPal did not respond to requests for comment, but said they were looking into the matter.
“We didn’t tell people to apply to multiple lenders at first. We thought it would clog the system. After the first round was a disaster, then all the other lenders opened up, and we thought that there would be a shorter queue, so it made sense to go with them, ”Zapko said.
“Nothing said you couldn’t apply for two; he was just saying you couldn’t accept two,” she said.
It is not known whether the duplicate funding error was made by the banks or the Small Business Administration. Those who were funded twice say they submitted multiple applications with the same employer ID number, which should have been reported by the SBA before entering the agency’s loan service portal. Each loan should have received an SBA loan number before being submitted.
“It is quite possible that this has happened. With something like this that is only a month old, that started very quickly, that has a bunch of other problems,” said US Senator Marco Rubio. from Florida, chairman of the Small Business Committee and a program architect.
“They should inform their lender in writing, notify the SBA in writing, call the lender who granted the loan, tell them what happened and try to get the money back as quickly as possible, to avoid any future problems. “, Rubio added.
Rubio said those who received duplicate loans will not be penalized if they are transparent about the error.
Screenshots show that the PPP loan money was deposited directly into a business owner’s bank account. (Screenshot)
Borrowers who received multiple loans said they had not received any instructions from lenders or the SBA on how to repay the excess funding for the Paycheck Protection Program. Many fear that they will ultimately lose funding for both loans if they do not receive proper advice.
Zapko said she was concerned the program was susceptible to fraud due to the error.
“I’m not sure they’ve fixed it yet. I think most people are going to give the money back really quickly because they’re worried they’ve accidentally committed a crime. But, you’re going to have a percentage of people who are not going to return the money, ”she said.
